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2016 (4) TMI 562 - AT - Income TaxDeduction u/s 80IC - DR in course of her arguments submitted that there was no substantial investment in fixed assets at the premises so as to enable one to conclude that assessee was carrying out manufacturing activity - Held that:- We do not find any substance in this plea of ld. DR because the requirement of investment depends on the nature of activity being carried out by assessee. It is not the case of revenue that with the investment at site the activities could not be carried out by assessee. The assessee has also referred to the tender documents and the third party inspection carried out at the vender’s premises. From these documents it is evident that the third party inspection was carried out at Sitarganj Unit and, therefore, it cannot be said that no activity was carried out at the said premises. The submissions of ld. DR to the contrary are not correct when the entire report is considered. Assessee has also relied on the decision in the case of Faith Biotech Pvt. Ltd. (2014 (9) TMI 724 - DELHI HIGH COURT), where even though assessee was carrying out assembling and manufacturing of air purifier by using sample tools and testing equipments. It was held that assessee would be entitled to deduction u/s 80IC.This decision clearly counters the claim of revenue that the value of fixed asset is one of the deciding criteria for arriving at a finding whether assessee was carrying out manufacturing or not. The assessee has filed copies of invoices in the paper book from which it is evident that the raw material was purchased at Sitarganj unit during the relevant year under consideration and the fabricated items were transported from the Sitarganj to the site of contratees. We do not find any reason to doubt the credentials of these invoices particularly when ld. CIT(A) has not referred to the specific invoices to which she has referred in her order in para no. 5.4.2 reproduced earlier. The next objection is regarding employees, the details of which have been referred to by ld. counsel for the assessee, noted in his arguments. From those details it is evident that keeping in view the nature of activity carried out by assessee, the number of employees and their qualifications could not be disputed. As far as the objection regarding ESI and PF is concerned, we do not find much substance in the same because that is no where the criteria for concluding whether assessee had actually carried out activity or not. If there is any default on the part of assessee in regard to ESI and PF provision, then under the relevant Act it would be liable for action, but on that count deduction u/s 80IC cannot be denied. 48. Further it is noticeable from the observation of ld. CIT(A), reproduced earlier, that she has in the alternative accepted that assessee would be entitled to 25% deduction u/s 80IC. This also cannot be accepted particularly when assessee had produced separate ledgers for the activities carried out at Sitarganj unit. First issue stands answered in favour of assessee and on the alleged ground that no activity was carried out at Sitarganj unit, deduction u/s 80IC cannot be denied.- Decided in favour of assessee Whether the activity carried out by assessee amounted to manufacture or production of any article or thing as contemplated u/s 80IC or not? - Held that:- Assessee was primarily carrying out the process of procurement, fabrication and installation of the retail visual identity (RVI), which can be subdivided into following activities: - i) Procurement of material, both imported and indigenous, ii) Fabrication of structural as per drawings given in the tender for each item, iii) Galvanising, powder coating of painting of the structural members in the workshop of vendor, Cutting, bending to shape and fabrication ACM as per given drawings .All these activities definitely culminate into producing of an article, which has different utility in commercial sense. The fabricated item cannot be said to be the same as was the raw material for producing the same. The raw material may not be undergoing any chemical changes but nonetheless the same is fabricated in a manner so as to create an article which is of use to assessee’s customer as per their specifications. - Decided in favour of assessee Whether in view of the provision of section 80AC, the assessee is entitled to deduction u/s 80IC on account of late filing of return. ? - Held that:- the legislature itself has allowed the assessee to file return belatedly subject to fulfillment of conditions written in the said section. Therefore, once those conditions are met, then return filed by the assessee would for all technical purposes be considered being filed u/s 139(1). Thus, keeping in view the various decisions noted earlier, we do not find any reason to deny the claim of assessee on the ground of filing the return belatedly. - Decided in favour of assessee
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